In its 10-K filing with the Securities & Exchange Commission last week, Xerox Corp. reiterated that it will pursue securitization, among other strategies, to fund its equipment customer finance businesses.

The company has several receivables facilities worldwide, funding lease arrangements in countries such as Canada, Brazil, Mexico, Italy and the Netherlands through different vehicles. Much, if not all, of this activity is in someway financed through GE Capital Corp. GE itself has been bumping around the rumor mill as a potential securitizer of equipment leases, possibly involving Xerox collateral. GE also bought Heller Financial in 2001. Prior to the acquisition, Heller was a regular issuer of equipment ABS. Beyond its mammoth Edison Asset Securitization ABCP conduit, via its various subsidiaries the GE name has seen the term market several times, be in the aircraft leasing sector or in shipping containers.

As for Xerox, the company last tapped the term market in 2001 with a $500 million equipment lease-backed deal via Merrill Lynch. The transaction was unique in that the leases were bundled with equipment service and maintenance contracts, which tied the performance of the collateral to Xerox's performance as servicer (beyond merely collecting). It was assumed that if Xerox was no longer able to perform maintenance on its equipment, much of it proprietary, the lessees would stop paying. This and similar arrangements in other leasing securitizations has capped potential ratings. Xerox's 2001 deal achieved a single-A from Standard & Poor's and Fitch Ratings, and an A3' from Moody's Investors Service.

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